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WHILE the $135 flood levy idea has been scrapped, Queensland households will still bear an average $11.20 extra a year, for an average urban home, to fund the emergency management, fire and rescue levy.

The formerly named fire levy will increase 6.5% a year from January 1 to help the government cope with "difficult" financial conditions.

This comes as Treasurer Tim Nicholls also announced his government would no longer provide an electricity rebate, which means households will be slugged an extra 21.4% on the bills from July.

The Queensland Competition Authority, which sets electricity prices, says the LNP's decision to freeze Tariff 11 prices in its first year of government had largely caused the increase.

Mr Nicholls said the LNP had considered reducing power price rises from 21% to 16% but it would have cost about $600 million and the budget could not take it.

He said there was no point taking the flood levy and then handing it back through an electricity rebate, so both were scrapped.

But Mr Nicholls said the government would continue to pay $615 million to ensure households in regional and rural Queensland paid the same amount as their city counterparts despite the higher service delivery costs.

Pensioner, concession, seniors and repatriation card holders will still get about $136 million assistance from the Queensland Government.

Mr Nicholls has also admitted he would fall about $300 million short of a promised financial surplus this coming financial year, blaming a "substantial hit" to revenue in the past 14 months.

He said revenue had decreased $4.5 billion and he expected another $1.2 billion drop on forecast taxes and royalties in the 2013-14 budget.

GST revenue will also fall $530 million.

Mr Nicholls said this meant "tough decisions" and the government's inability to provide cost of living relief to Queenslanders.

"We've had to do that to ensure we continue to deliver services Queenslanders want at a price they're prepared to pay," he said.

Mr Nicholls said they would instead introduce 7-9% stamp duty on insurance products, excluding compulsory third party and workers compensation scheme, the fire levy increase and defer planned increase to the payroll tax threshold which would likely affect plans for many small businesses.

"No one could have forecast the absolute fall off in revenues that we've seen," he said.

"It's just as a consequence, particularly, of the high Australian dollar and falling coal commodity prices that we've had to rebalance it.

"Land tax for the first time since 1996-97, is less in 2013-14 than it was the year before, and gaming machine revenues from casinos is going to be down almost 3%."

When asked about how the LNP could do this when they campaigned for government on cost of living reforms, Mr Nicholls said his government was committed to driving down cost of living rebates but it was not "enshrined" in policy commitments.

Pre-budget news in a nutshell

Fire levy to increase 6.5% from January 1. This is $11.20 for an average urban household, including large regional centres, from $172.63 to $183.85 on January 1. This will be $90 for new properties.

Stamp duty will increase 7-9% on insurance product. This equates to a $25 a year increase on a $300,000 home with $75,000 contents.

Deferring planned payroll tax threshold increases for two years will net $235 million.